Emory Corporate Governance and Accountability Review

Volume 4Issue 2
Law & Innovation Issue

Electronic Equity Management Platform for Privately-Held Companies: Benefits, Risks, and Costs

George Akers | 4 Emory Corp. Governance & Accountability Rev. 341 (2017)

Software-as-a-service equity management platforms (“EMPs”) have emerged in recent years to simplify and streamline the issuance and management of securities for private companies and their lawyers by taking documents and processes previously reliant on paper and making them electronic. By allowing users to electronically issue, sign, and manage stock certificates, options, and other convertible securities, EMPs can save time for lawyers/paralegals and reduce legal costs for clients. EMPs provide various other benefits as well, including automated compliance checks, pro forma financing and exit scenario modeling, and inexpensive 409A valuations. However, despite the cost-savings and other benefits to using electronic equity management platforms, there are also new risks in using these platforms, such as data loss, data breach, and lack of data access. Overall, if the risks are properly managed and the cost structure makes sense, EMPs can be a smart choice for companies and lawyers looking for greater efficiency, convenience, and lower costs in the issuance and management of securities.

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Cybersecurity Is Not a Product, It’s a Process: Financial Service Regulators Hold Insurance Company Boards Responsible for Cybersecurity

Alice T. Kane & Phillip A. Goldstein | 4 Emory Corp. Governance & Accountability Rev. 353 (2017)

Cybersecurity remains top of mind in the financial service industry. Hacking and breaches are ever present and it is clear that Corporate Boards of Directors have oversight responsibility for cybersecurity vigilance. Recently, in the financial service industry, insurance and banking regulators are issuing regulations and proposed regulations which set forth specifics for Boards as they exercise this oversight responsibility. The latest draft of the NAIC Insurance Data Security Model Law outlines the oversight role for the Board of Directors to ensure that there are adequate cybersecurity policies, technical staff, and annual reports provided to the Board. The Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation have, late last year, released a Joint Advance Notice of Proposed Rulemaking for enhanced cyber risk management standards that reinforces the concept of Board Governance for Cybersecurity programs, oversight and reporting. We intend to present these Board governance requirements, their breath and the different approaches taken by each regulator, which all reinforce the common theme: the oversight responsibility of Corporate Boards of Directors for Cybersecurity.

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R&D Tax Incentives: Creating an Unlevel Playing Field?

Stefanie Kavanagh | 4 Emory Corp. Governance & Accountability Rev. 363 (2017)

In many countries, including the United States, governments have implemented regulations that aim to encourage expenditure on research and development (“R&D”). Often, the regulations used to encourage R&D can have the effect of stifling innovation. This is because the tax incentives available for R&D disproportionately benefit large multinational enterprises (“MNEs”) and do little to benefit startups and small businesses. As a result of the disparate benefits received from R&D-related regulations, startups and small businesses, which often have very innovative and cutting-edge ideas, are unable to compete with large MNEs. Because of this inability to compete, innovative ideas are left unrealized. In the United States specifically, MNEs benefit much more from the R&D tax credit than startups and small businesses do, and this disparity results in an unlevel playing field. The U.S. Government has taken a step in the right direction through the changes made in the PATH Act in 2015, but there is still room for improvement. The implementation of a well thought-out IP box regime could significantly improve the ability of startups and small businesses to compete with MNEs.

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The Evolving Landscape of Data Privacy and Cyber Security in the Financial Services Industry

Craig Nazarro, Matt White, & Eric Setterlund | 4 Emory Corp. Governance & Accountability Rev. 369 (2017)

The regulation of data privacy and cyber security in the financial services sector is in its infancy. This is partly due to the fact that the regulation of Financial Services is fragmented with multiple regulators covering different risks across different entities including the Federal Reserve, FDIC, OCC, SEC, FINRA, CFPB, FinCEN, as well as all the applicable State Agencies covering traditional commercial banking, consumer lending, investment banking, and broker dealer activity. We will review what standards are currently being utilized by both the prudential regulators, the CFPB, as well as the New York Department of Financial Services, and the best practices that those in the commercial banking and consumer lending spaces should implement including review of the FFIEC’s Cyber Security tool. After our discussion of compliance on the front end, we will close with best practices to implement in the event of a breach and how the best practices put place prior to the breach will help in limiting your regulatory, reputational and litigation liability post breach.

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